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Rewards programs are great, but will customers pay for them?

Rewards programs had the most appeal when they came from groceries and mass merchandisers, but will customers pay for the benefits?

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Reward programs today

Rewards programs are a great way to turn your occasional customers into loyal regulars – and new research suggests that people might be more willing than you think to buy into such programs.

A report released this May by LoyaltyOne, a marketing firm specializing in crafting loyalty programs for retailers and other businesses, suggests that the majority of customers would be willing to buy into a rewards program. Of surveyed web users, 62 percent said that they would pay to join a rewards program if their favorite retailer offered one. Rewards programs were especially popular amongst the younger set, with 77 percent of respondents ages 25 to 34 expressing willingness to pay a fee for membership.

Grocery coupons still reign

Rewards programs had the most appeal when they came from groceries and mass merchandisers, with credit card offers ranking a close second. Over 60 percent of respondents had the impression that there were better rewards to be had in fee-based programs than in programs offered for free.

Two thirds of respondents said that they thought it was well worth the fee to access relevant rewards, and once again, even more twenty- and thirty-somethings agreed. But what kinds of rewards are considered “relevant”? Most customers are willing to pay a fee upfront if they think it will mean saving money later – so discounts, coupons, and sales are key.

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The lessons to be learned

There are important lessons to be learned from Amazon’s recent clearance event, Prime Day, a sale targeted towards its loyalty program members. The sale, which promised massive savings for Prime members only, was designed to drive up Prime membership.

Unfortunately, most customers were left bellyaching about the embarrassing selection of useless items offered in the sale. Remember, your loyalty members are likely to be your best customers, so make sure, if you ask them to pay a fee that you live up to the rewards you promise.

Ellen Vessels, a Staff Writer at The American Genius, is respected for their wide range of work, with a focus on generational marketing and business trends. Ellen is also a performance artist when not writing, and has a passion for sustainability, social justice, and the arts.

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